SWEDEN/UK - Swedish pension fund Forsta AP-fonden (AP1) filed a lawsuit yesterday against BNY Mellon with the Commercial Court in London over $35.5m of losses.
The lawsuit centres on AP1's allegations that investment decisions taken by BNY Mellon in 2008 on its behalf in its capacity as the fund's securities lending agent were negligent and in breach of the fund's investment guidelines.
It claims the decisions led to losses of Skr230 million ($35.5 million) which BNY Mellon deducted from the fund's managed account on November 19, 2009. The deduction was shown in the fund's annual reports for 2008 and 2009 and its earnings for 2008.
The investment decisions related to the investment of collateral in notes issued by Sigma Finance which went into receivership in October 2008.
Johan Magnusson, managing director of AP1, said it had been trying to come to an agreement with BNY Mellon for some time without success. "We therefore see no option other than to file a lawsuit in order to have this matter resolved by the court. We believe that BNY Mellon have a case to answer and we have confidence in the merits of our position," added Magnusson.
A spokesperson for BNY Mellon said at this stage the bank had not had the opportunity to look at the complaint so it could not comment.
AP1 is one of five buffer funds in the Swedish pensions system which evens out fluctuations at times when pension contributions do not cover pension pay-outs. It has Skr181.4 billion ($27bn) in net assets.
*Sophia Morrell is editor of International Custody and Fund Administration magazine
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